Fidessa blog: Can't see the wood for the regulatory trees?

First Published 20th November 2015

Steve Grob, Fidessa

When you are immersed in an industry it's sometimes
difficult to see how it's really changing, says Steve Grob,
Director of Group Strategy, Fidessa.

Global financial markets are a good example of this
as the populist headlines can easily miss the subtlety of what
is really going on. The polemic against misbehaviour by some
market participants is obviously deserved (estimates of the
total in fines and related costs are approaching USD 300
billion) and, of course, no conversation about the industry is
complete without mention of the 'R' word. It's easy, then, to
fall into the trap of believing that we face the rest of our
working lives chained to an ever-growing compliance
burden.

Against this, however, is the simple fact that
global creation and consumption of financial instruments is
going up. But what is changing is how they are consumed and who
gets to participate in the food chain. Making money out of
market opacity will be out, as will simply getting between
customers and sources of liquidity. In its place is an exciting
world where Gen Y traders will combine structured and
unstructured data to provide genuine (and real-time) expertise.
And this will all need to be done in a way that is secure,
audited and error-free. New business models will emerge, too,
in terms of how participants are brought together. Fixed
income, for example, is on an inevitable journey towards being
electronically traded as the cost of warehousing risk continues
to rise. The question is, which venues will be successful and
when?

I guess the point I am trying to make is that the
firms that will succeed are those that embrace these changes
and are excited by them, rather than trying to hold back the
tide.